If you’re like most people, you probably have a few dollars saved up that you’d like to invest. But should you put your money in stocks or cryptocurrency? Both have their pros and cons, so it can be tough to decide which is the right choice for you. In this blog post, we will compare investing in crypto vs. stocks and help you decide which is the better option for you!
Get Some Investing Advice
If you’re thinking about investing in either cryptocurrency or stocks, it’s important to get some professional advice first. There are a lot of risks involved with both options, and you don’t want to make any decisions without knowing all the facts. Talk to a financial advisor or two and see what they think before making any final decisions. For example, this Motley Fool review states that “You should only invest money in stocks — or any investment — if you’re prepared to lose all of your initial investment.” Therefore, always do your research before buying anything!
When it comes to investing in crypto vs. stocks, there are a few key differences that you should be aware of. For one, cryptocurrency is a much newer industry than the stock market. This means that there is more potential for growth in the crypto world, but it also comes with more risk. The stock market, on the other hand, is a lot more stable but doesn’t offer as much potential for huge gains.
Crypto Is A Possible Hedge Against Fiat Currency
Cryptocurrencies may provide a hedge against fiat currency. Fiat currencies are government-issued legal tender, whose value is backed by the issuing government. The value of fiat currencies can be volatile, due to factors such as inflation, economic growth, and political stability.
Cryptocurrencies, on the other hand, are not subject to these same volatility risks. Their value is based on the underlying technology, which is not subject to government control. Therefore, investing in cryptocurrencies may provide a way to hedge against fiat currency volatility.
Stocks Have A History Of Solid Returns
Investing in stocks has historically been a solid investment, with returns averaging around seven percent annually. When you compare this to the average return of cryptocurrency, which is around three percent, it’s easy to see why some investors might be hesitant to put their money into crypto. However, there are some key differences between the two investments that you should consider before making a decision.
For one, stocks are much more regulated than cryptocurrency. This means that there is more protection for investors in the event of fraud or mismanagement by the company. Additionally, stocks are traded on centralized exchanges, which allows for more liquidity and easier trading.
Cryptocurrency, on the other hand, is a decentralized asset. This means that it is not subject to the same regulations as stocks. Additionally, crypto is often traded on decentralized exchanges, which can be less liquid and more difficult to trade.
Crypto Can Be Extremely Volatile
In the past few years, crypto has been one of the most volatile asset classes in the world. In 2017, Bitcoin surged from around $900 to nearly $20,000 before crashing back down to around $12,000. Ethereum saw similar gains and losses over that period.
While those kinds of returns are certainly possible in stocks as well, they’re much less common. In 2017, the S&P 500 gained around 19%. That’s a great return, but it’s a far cry from the gains seen in crypto.
Of course, those same volatility levels also mean that you can lose a lot of money just as easily as you can make it. In the stock market, there are plenty of companies that have gone bankrupt and wiped out their shareholders. So, if you’re thinking about investing in crypto, you need to be prepared for the fact that your investment could go to zero. You must be willing to take that risk.
Stocks Have Less Potential For Extreme Gains
When it comes to potential gains, stocks have less upside than cryptocurrency. While a company stock might triple or quadruple in value over time, it’s unlikely to increase in value by ten or twenty times. On the other hand, cryptocurrency has the potential for much more extreme gains. For example, Bitcoin increased in value by over 1000% in 2017. While there’s no guarantee that any cryptocurrency will experience such growth, the potential is certainly there.
Investing in cryptocurrency may also be a more efficient use of your investment dollars. This is because you can buy a fraction of a coin, rather than having to purchase an entire stock. So, if Bitcoin cost $15,000 per coin and you only had $500 to invest, you could purchase 0.033 of a Bitcoin. However, if you wanted to purchase a stock that cost $15,000 per share, you would have to purchase the entire share. This means that your investment dollars can go further when investing in cryptocurrency.
Of course, investing in cryptocurrency comes with its own risks. The most obvious risk is that the value of your coins could go down, rather than up. Cryptocurrency is also a fairly new investment opportunity, which means that there’s less information available about it. This can make it more difficult to predict how it will perform in the future.
Stocks Do Have Intrinsic Value
A lot of people view cryptocurrency as being worth nothing because it doesn’t have any physical form. However, stocks also don’t have a physical form, yet they are seen as having more value. The reason for this is that stocks represent a company that has intrinsic value. This means that the stock represents something that someone is actually willing to pay for.
On the other hand, cryptocurrency doesn’t have any intrinsic value. This is because it isn’t backed by anything tangible. There is no company or product that it represents. Instead, crypto is simply a digital asset that people are willing to trade for other assets.
So, when you’re deciding whether to invest in crypto or stocks, you need to ask yourself which one is more likely to increase in value. If you believe that a company has the potential to grow and generate more revenue, then investing in its stock would be a good choice.
In conclusion, there are pros and cons to both investing in crypto and stocks. You need to decide which one is right for you based on your own investment goals and risk tolerance. If you’re willing to take on more risk, then cryptocurrency may offer the potential for greater rewards. However, if you prefer a more stable investment, then stocks may be the better choice.